Field of Gold: Farmers, the Divorce Courts and a Very Different Cash Crop

22/07/2012 15:48 BST
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Updated
20/09/2012 10:12 BST

Residential property prices in the UK currently resemble something of a curate's egg slightly past its sell-by date.

Official figures out this week show an apparent slight increase overall, reportedly due in no small part to the housing market in the South East driving growth elsewhere.

However, even a modest rise in values leaves them well below the record highs they achieved before the effects of recession first began to be felt in 2008.

As the cities struggle, things seem to be very much different in the country. New data reveals that farmland prices in the UK are on course for a tenth consecutive year of growth.

Estate agent Savills suggests investment has been a prime factor. Farmers, it says, have been looking to expand their operations while individuals lacking any real agricultural pedigree have sought to take advantage of potential tax benefits from possessing large tracts of land.

The result of that has been a doubling - and, in some cases, trebling - of the value of certain land in only a few years. A reduction in the amount of land up for grabs, perhaps caused by owners being keener to hang onto their not-so-smallholdings, has only added to the premium given to any coming onto the open market.

Such a scenario might well be regarded as welcome news on a professional level for farmers.

There are, though, a growing number who understand the personal consequences of the increase.

In recent years, with the rises firmly established as a pattern and not a blip, more and more farmers have realised the need to prevent the possible loss of large chunks of their assets on divorce.

They have been contacting Pannone to take out pre- and post-nuptial agreements with ever greater frequency. They know that contining increases in the value of farmland potentially mean a bigger pot to be divided with their ex-spouse.

The issues were crystallised in a notable decision in the House of Lords in 2000. It confirmed a decision to award Pamela White a larger share of the assets which she had amassed jointly with her husband, Martin, during the course of their 33-year marriage because of her contribution to making their farm a success, including raising a family.

Together with the rising price of land, farmers have begun to understand the financial scale of what was involved, something on which Pannone commented in the UK's farming press last year.

Those from farming families, in particular, seem to appreciate the sensitivities involved. The land which they work has often been passed down through successive generations, a process which they want to continue.

As my colleague Fiona Wood remarked to the Financial Times only last month, family farmers often live or work together with their relatives on a farm, making any division of land even more complicated.

In such circumstances, protecting their land before marriage assumes greater importance. I have been made aware of instances in which parents have insisted that children take out prenups in advance of a wedding ceremony.

It is important to remember that prenuptial agreements are not legally binding in England and Wales. A Supreme Court ruling in October 2010 in favour German heiress Katrin Radmacher gave added weight to the documents but they remain only one factor to be taken into account by the courts in determining the size of any divorce settlement.

If drafted properly, with each side having independent legal advice, they can, though, have considerable influence in the outcome of any marital split.

Whether arable or livestock, more farmers view prenups as a practical and pragmatic business tool even if they don't seem romantic.